Jewelry insurance comes in many
forms and varieties and only an insurance agent can provide accurate
and specific advice. However, it helps to know enough about jewelry
insurance to ask your agent the right questions and to be aware
of how the process works. The time to ask your insurance agent
the questions is before you insure an item, not when you need
to file a claim. Read the fine print in your insurance contract
to be sure it provides the coverage you expect.
Understanding jewelry insurance begins with recognizing
the difference between scheduled and unscheduled property.
Unscheduled property (jewelry not specifically
listed) is typically included in basic homeowner or renter’s
policies under blanket coverage. There is a usually a deductible
(typically $500) and a maximum amount of coverage (typically $1500)
although these amounts can vary with the specific policy. This
type of coverage does not require an appraisal but sales receipts,
written descriptions or photos are beneficial in proving the items
existed and estimating their replacement value.
Scheduled property (jewelry specifically listed)
is included in a floater, rider or endorsement to homeowner or
renter’s policies. Jewelry insurance is also available with
a separate policy, from a company specializing in jewelry insurance.
For scheduled property, the insurance appraisal is vital because
it describes the jewelry item and provides the “insured
value” that is used in determining the premium you will
pay to insure the item each year. Most scheduled property policies
do not have an automatic appreciation adjustment as is common
for the house and other unscheduled property. Therefore, even
if it might cost 50% more to replace an item in five years, the
“insured value” is still only that stated in the appraisal.
If you file an insurance claim, the settlement
process and amount paid will depend on the policy and in particular,
if the policy allows replacement or agreed value settlement. For
agreed value policies, the settlement amount is stated in the
policy whereas replacement value allows the insurance company
to replace your jewelry or make a cash settlement based on the
insurance company’s cost to replace your item. The insurance
company’s liability ceiling is set at the “insured
value” on the appraisal.
Do you have enough jewelry insurance? The answer
depends on what kind of policy you have, the “insured value”
is on the appraisal, the settlement procedure is for your particular
policy, and the accuracy of the information on your appraisal.
If you have a jewelry item valued at more than the $1500, you
should definitely consider scheduled as opposed to unscheduled
coverage.
The critical issue for scheduled property coverage
is the how accurate is the information on the appraisal.
1) If the information on the
appraisal is vague and general, the insurance company can replace
the item with an item that satisfies the description but perhaps
is not the quality and true value of the lost item. Be sure your
jewelry appraisal has a detailed and accurate description of the
jewelry item.
2) If the appraisal value is
artificially high, the insurance company can replace the item
at their cost even though the client paid premiums for years on
a value twice as much. This is often the case for purchases from
a jewelry store with prices double other retailers and the store
provides an insurance appraisal even higher than the purchase
price. You do not need an appraised value more than 150% of the
price you would pay at low priced online retailer.
3) If the appraisal value is
too low, the insurance company can make cash settlement that might
not cover the current replacement cost of the item. This could
be the case for items purchased three or four years ago from a
low price online retailer and the appraised value was at or below
the purchase price. With diamond prices increasing about 10% a
year recently, it does not take long for appraisal values to be
out of date if too close to online retail purchase prices. Be
sure to have your jewelry insurance appraisal updated every four
or five years so you do not end up underinsured.
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